France: GDP growth slows in Q3
GDP growth waned to 0.1% on a seasonally adjusted quarter-on-quarter basis in the third quarter, from 0.6% in the second quarter. The reading was in line with market expectations.
On an annual basis, economic growth lost momentum, cooling to 0.7% in Q3, compared to the previous period’s 1.1% expansion. Q3’s reading marked the softest expansion since Q4 2020.
Domestic demand underpinned growth in the quarter. Private consumption growth sped up to 0.7% seasonally adjusted quarter-on-quarter in the third quarter, which marked the best reading since Q2 2022 (Q2: +0.0% s.a. qoq). Falling inflation throughout the quarter provided some support to households. Moreover, public consumption growth ticked up to 0.4% in Q3 (Q2: +0.2% s.a. qoq), while fixed investment growth accelerated to 1.0% in Q3, from 0.5% in the prior quarter. As such, internal demand contributed 0.7 percentage points to growth. That said, inventory changes detracted 0.3 percentage points from the reading.
Meanwhile, the external sector weakened. Exports of goods and services fell 1.4% on a seasonally adjusted quarterly basis in the third quarter, which contrasted the second quarter’s 2.4% expansion. In addition, imports of goods and services deteriorated, contracting 0.5% in Q3 (Q2: +2.5% s.a. qoq). All in all, net foreign trade detracted 0.3 percentage points from the headline figure.
Looking at 2024, the economy is seen growing at a similar rate to this year. A further slowdown in inflation is set to buttress household spending, while a recovering German economy will provide support to exports. Nonetheless, fixed investment growth will wane, hampered by the lagged effect of interest rate hikes.